PM unveils plan to cut power bills by $250

Australian families will save $250 every year on their electricity bills under a plan unveiled by Prime Minister Julia Gillard.

Ms Gillard on Sunday announced she would be taking her plan to state premiers at next week's Council of Australian Governments in Canberra.

The strategy will address the "real drivers" of high power prices such as the overinvestment - or "gold plating" - of Australia's electricity network, Ms Gillard said.

The Australian Energy Regulator will get a funding boost, and consumers will be given more information and "more of a say" about their own energy usage.

"We can make a difference," Ms Gillard told Channel Ten on Sunday.

"The Productivity Commission has said this all adds up to a difference of around $250 a year for a family."

Under the plan, Ms Gillard said power-hungry businesses that moderate their energy usage during peak periods would also be rewarded.

Ms Gillard said the plan could "absolutely" deliver the savings to families without requiring the NSW and Queensland governments to sell off their power assets.

"This isn't about the ownership of electricity assets, it's about the way in which our power system works," she said.

Instead, the measures address the overinvestment in poles and wires and the "perverse incentive" for power companies to spend more and pass on the costs to consumers.

Ms Gillard said around $11 billion was invested just for peak loads across four days of the year, adding the federal government could do better than that.

A key feature of the strategy will be to put energy users at the centre of the decision making process through a ‘‘consumer challenge panel’’.

Families will get more information about their electricity usage so they can make choices knowing how much they’re spending, she said.

At COAG, Ms Gillard is expected to ask state premiers to implement cost-reflective pricing and smart meters and commit to retail price deregulation where competition exists.

Consumer-advocacy group One Big Switch said the plan was a ‘‘valuable start’’ but might take some time for the $250 savings to flow through.

‘‘At long last the commitment to make the national electricity market work in the long term interests of consumers may come to pass but it’s been a long time coming,’’ the group’s campaign director Christopher Zinn said in a statement.

Energy Networks Australia welcomed the consumer challenge panel as a real step towards improving community engagement on power pricing.

Modelled on a system used in the UK, the panel would operate inside the energy regulator and should enhance transparency and public confidence, ENA CEO Malcolm Roberts said in a statement.

‘‘It is vital that the panel represents all electricity users: low income consumers, middle income families, small business and large energy users,’’ he said.

‘‘Different consumers have different priorities.’’

The Clean Energy Council said focusing on smart meters, flexible pricing and more power-efficient technology would help businesses become more competitive.

However, appropriate incentives also need to be in place to encourage less energy usage across the board, the council said.